Fixed Deposits

Deposit Amount No limit or Rs. 100
Tenure 7 days to 10 years
Interest Rate 2.25% to 7.35%
Interest payment Monthly, quarterly or annually
Deposit Insurance Guarantee under DICGC for deposits at banks, but not for deposits in HFCs and NBFCs
Fixed Deposit Schemes Regular FD, Tax saving FD, Senior citizen FD, Sweep-in FD
Providers Banks, NBFCs and Small Finance Banks

Fixed Deposits (FDs) are an investment and savings tool offered by banks, small finance banks, NBFCs, and HFCs. It offers fixed income due to a pre-decided interest rate over a specific tenure. An FD is also known as a Fixed Deposit Receipt (FDR) or Term Deposit. It offers a higher interest against that on a savings deposit. Choosing an FD is a great decision, as you can get surplus money on investments without risks. It offers a safety net against market ups and downs, and an assured return.

  • You can even save tax on the interest earned if you opt for a tax-saving FD.
  • Also, you can go for a loan against fixed deposit without liquidating the account.
  • You can renew a fixed deposit.
  • You can also opt for premature withdrawals on a penalty.

In this post we will discuss about latest fixed deposit interest rates, tenures, and banks/institutions offering these schemes. Besides this, we will also throw light on FD features, eligibility criteria, types, nomination facility, FDR, premature withdrawals, renewal, loan on fixed deposit, taxation on interest, comparison between FDs offered by banks/NBFCs/corporates, and FAQs.

Bank Interest Rates FD Tenure
State Bank of India (SBI) 2.90% - 5.40% 7 Days - 10 Years
Axis Bank 2.50% - 5.50% 7 Days - 10 Years
ICICI Home Finance 6.00% - 6.50% 12 Months - 120 Months
Bank of Baroda 2.90% - 5.30% 7 Days - 10 Years
IDBI Bank 2.90% - 5.20% 7 Days - 20 Years
HDFC Bank 2.25% - 4.00% 7 Days - 60 Months
IDFC First Bank 2.75% - 6.00% 7 Days - 10 Years
ICICI Bank 2.50% - 5.50% 7 Days - 10 Years
Equitas Small Finance Bank 3.60% - 7.35% 7 Days - 10 Years
Citibank 2.75% - 3.75% 7 Days - 1825 Days
HDFC 5.85% - 6.25% 33 Months - 66 Months
Kotak Bank 2.50% - 5.10% 7 Days - 10 Years
PNB 3.00% - 5.25% 7 Days - 10 Years
LIC Housing Finance 5.50% - 5.60% 18 Months - 5 Years
Indian Bank 2.90% - 5.25% 7 Days - 10 Years
Allahabad Bank 2.90% - 5.25% 7 Days - 10 Years
Indian Overseas Bank 3.40% - 5.25% 7 Days - 10 Years
Andhra Bank 3.00% - 5.40% 7 Days - 10 Years
OBC 3.00% - 5.25% 7 Days - 10 Years
PNB Housing Finance 6.20% - 6.70% 12 Months - 120 Months
Canara Bank 3.00% - 5.35% 7 Days - 10 Years
Bank of Maharashtra 3.00% - 4.90% 7 Days - 10 Years
India Post Office 5.50% - 6.70% 7 Days - 5 Years
Dhan Laxmi Bank 3.50% - 5.60% 7 Days - 10 Years
Punjab and Sind Bank 3.25% - 5.30% 7 Days - 10 Years
United Bank of India 3.00% - 5.25% 7 Days - 10 Years
Bank of India 3.25% - 5.30% 7 Days - 10 Years
Central Bank of India 2.75% - 5.00% 7 Days - 10 Years
RBL Bank 3.50% - 7.15% 7 Days - 20 Years
UCO Bank 2.75% - 5.00% 7 Days - 10 Years
Jana Small Finance Bank 3.50% - 7.50% 7 Days - 10 Years
Karur Vysya Bank 3.50% - 5.65% 7 Days - 10 Years
Syndicate Bank 3.00% - 5.35% 7 Days - 10 Years
Standard Chartered Bank 4.25% - 6.30% 7 Days - 5 Years
Union Bank of India 3.00% - 5.40% 7 Days - 10 Years
HSBC Bank 2.25% - 4.00% 7 Days - 60 Months
IndusInd Bank 3.25% - 7.00% 7 Days - 10 Years
Yes Bank 4.00% - 7.00% 7 Days - 10 Years
Karnataka Bank 3.50% - 5.70% 7 Days - 10 Years
Corporation Bank 3.00% - 5.40% 7 Days - 10 Years
Ujjivan Small Finance Bank 3.05% - 6.50% 7 Days - 10 Years
DCB Bank 4.75% - 6.95% 7 Days - 120 Months
Jammu And Kashmir Bank 3.00% - 5.30% 7 Days - 10 Years
AU Small Finance Bank 3.75% - 6.75% 7 Days - 120 Months
South Indian Bank 3.50% - 5.50% 7 Days - 10 Years
Bajaj Finance 6.90% - 7.10% 12 Months - 60 Months
Bandhan Bank 3.00% - 6.00% 7 Days - 10 Years
ESAF Small Finance Bank 4.50% - 7.00% 7 Days - 10 Years
Federal Bank 2.50% - 5.50% 7 Days - 3 Years
DBS Bank 2.75% - 5.20% 91 Days - 10 Years
Lakshmi Vilas Bank 3.60% - 6.50% 7 Days - 10 Years
Fincare Small Finance Bank 3.50% - 7.00% 7 Days - 84 Months

Features of a Fixed Deposit Account

A term deposit/time deposit or fixed deposit is a financial investment tool that offers fixed returns over a fixed duration. Here, you save a lump-sum amount on which interest is earned at regular intervals. It is often said to be as a safe option for building fund. The tenure of an FD account can vary between 7 days and 10 years. Here are some of the features of a fixed deposit account:

  • Types of Schemes: Some of the commonly known FD schemes are for tax saving and senior citizens, apart from the regular ones. Banks as well as small finance institutions offer these accounts.
  • Interest Rates: The rates on fixed deposits differ from 2.25% to 7.50%.
  • Renewal: You can renew the scheme after maturity of the existing scheme or beforehand by serving a standing instruction to the provider.
  • Loan on FD: You can take a loan against the fixed deposit from the same provider with whom you have opened the FD account. An interest rate of about 0.75% to 1% higher than original interest applicable on the account, is what you have to bear on the loan.
  • Early Withdrawal: You can break an FD before maturity but it will come with penalty charges. You will earn lower interest on the account or a deduction on the received amount.
  • Deposit Insurance: A deposit amount of up to Rs. 5 lakhs are covered under deposit insurance. The same protection under DICGC (Deposit Insurance and Credit Guarantee Corporation) is not extended to NBFC deposits. Insurance or safety of the NBFC deposit depends on the rating of the provider.

Fixed Deposit Eligibility Criteria

Here are the eligibility norms for opening an FD account:

  • If you are over 18 year of age, have own PAN Card, then you can open a fixed deposit account.
  • You have to submit the KYC documents (proof of age, proof of address, and proof of identity).
  • HUF or Hindu Undivided Family with a separate PAN can also open the account.
  • Even minors (individuals below 18 years of age) can opt for this account with a parent or guardian (older than 18 years).

Types of Fixed Deposits

Here are different types of FD schemes:

  • Regular FD: In this type of FD, you can put money in the account from 7 days to 10 years for a fixed term. Taxes are applicable as per the tax slab rate your income falls in. You can either opt for non-cumulative or cumulative FD as per need. In a non-cumulative FD, you can withdraw interest monthly, quarterly, or half-yearly. In a cumulative FD, the interest earned is paid at the time of maturity.
  • Flexi FD: This type of FD combines the benefits of both current/savings account and FD. You can avail auto-sweep facility here. So, whenever you have funds in excess in savings account, you can transfer the same to your fixed deposit account.
  • Senior Citizen FD: If you are over 60 years of age, you can invest in senior citizens fixed deposit. The interest rate will be higher than that for a regular FD.
  • Tax Saving FD: A tax-saving fixed deposit comes with a lock-in period of 5 years. You can earn tax deductions under the Section 80C of the Income Tax Act. The tax exemption limit is up to Rs. 1.5 lakhs in a financial year of making the deposit. The investment for such an FD is in lump-sum.

Nomination Facility

Here are details about the nomination facility:

  • All FD account holders can choose the nomination facility.
  • You can add only one nominee whom you want the amount to be transferred in case of your death.
  • As a depositor, you can add a nominee to your new or existing account.
  • You can change or cancel the nominee anytime during the tenure of the fixed account.
  • If you do not add a nominee, then the amount on the account will not be transferred to anyone, except the next legal heir.
  • The claimants will then have to establish their bonafide to the FD provider.

Fixed Deposit Receipt (FDR)

Here is information on FDR:

  • An FDR is a document that you will receive by the bank/financial institution on opening the FD account. This receipt is like a bill, basically a proof that you have opened the account.
  • It will have details such as your (depositor’s) name, age, deposit tenure, principal amount, booking date, interest rate, maturity date, and other terms and conditions.
  • You must keep this document safely as it will be required at the time of premature withdrawal, loan against FD, or renewal.

Premature Withdrawals

There could be an instance where withdrawing money from your FD account becomes mandatory. This could be due to cash crunch or any financial emergency. In such a case, you may have to withdraw prematurely.

  • You may have to break the fixed deposit, which the provider will allow on levy of a penalty at the time of premature withdrawal.
  • The penalty will either be a deduction in the withdrawal amount or lower interest returned on the principal component.
  • Certain banks such as Bank of Maharashtra and YES Bank, these days waive off the interest penalty on fixed deposits in case of the latter’s liquidation given an emergency.
  • On the other hand, few banks offer the option of partial withdrawal without a penalty.

Fixed Deposit Renewal

Here are details on FD renewal:

  • You can renew your FD account on maturity. You have to contact the bank branch where the deposit is made for the same.
  • You can also place a request for auto renewal with the bank on the principal component or the entire maturity amount.
  • In case you want to renew only the principal amount, then the interest (subject to TDS) is credited to your bank account.
  • The interest rate on the renewed account will be as per the rate offered at the time of the previous fixed deposit maturity.

Loan against FD

Here are details about a loan on FD:

  • If you are in need of additional funds, then you can take a loan against fixed deposit account. Here, you do not have to make premature withdrawals and lose interest income.
  • You can get up to 90% finance on the value of FD.
  • It is not necessary to have a high CIBIL score to get a loan against your fixed deposit. An average or low credit score may also do.
  • The bank with which you have the account will be the one to offer the loan.
  • A loan against the bank’s own deposit is exempt from base rate. Thus, its possible the rate is lower than the institution’s base rate.
  • The interest charged will be 0.5% to 2% more than the original interest on the deposit.
  • Tenure of the loan could be either less or up to the balance maturity of the deposit.

Taxation on FD Scheme

Here is information on taxes applicable on fixed deposit accounts:

  • FDs are taxable. But the principal deposit amount (the amount you invest or deposit initially) is exempt of taxes if you choose a tax saving FD.
  • Interest earned on FD is taxable as per the tax rate applicable on your income.
  • Provide your IT PAN during opening of the FD account. The bank will otherwise deduct double TDS at applicable rate.
  • You can only claim credit of exempted TDS on the account, if the bank has your PAN record.
  • If the earned interest from all the FDs in a bank is over Rs. 40,000 then you have to pay TDS (tax deducted at source) 10% on the interest amount.
  • Given the Covid-19 pandemic, the TDS has been reduced to 7.5% from 14th May 2020 to March 2021.
  • The fixed deposit interest is taxable on accrual basis. If you receive the FD maturity amount and interest together, then you have to pay the tax on the accumulated interest every year.

Comparison Between Bank FDs, NBFC FDs, and Corporate FDs

Here is a detailed comparison:

FDs by Banks FDs by NBFCs and FCs FDs by Corporates
Credit rating Not needed Is required Is required
Safety The maximum Not as much as that granted by banks Not as much as that granted by banks
Tenure 7 days to 10 years 1 year to 5 years 1 year to 5 years
Interest Rates Large banks offer lower rates and small finance companies provide higher rates More than that offered by banks. If the credit rating is high, lower will be the rate and vice-versa More than that offered by banks. If the credit rating is high, lower will be the rate and vice-versa
Frequency of interest compounding Every quarter May differ May differ
Loan against FD Offered at 0.5% to 1.0% higher than the applicable FD rate May be provided Not provided
Maturity Options Cumulative and non-cumulative Cumulative and non-cumulative Cumulative and non-cumulative
Coverage under DCGCI Up to Rs. 5 lakhs of deposits (from all bank accounts accumulated) No No
Flexi/Sweep facility Is possible NA NA
Nomination Facility Is available Is available Is available
TDS For a PAN, an interest income over Rs. 10,000 in one bank across branches For a PAN, an interest income over Rs. 5,000 For a PAN, an interest income over Rs. 5,000
FD Tax Benefit Tax-saving FD of 5 years, benefit on principal amount as per the Section 80C of Income Tax Act NA NA
Senior Citizens Benefits Higher interest rate by 0.25% to 1.0% Higher interest rate by 0.25% to 1.0% Higher interest rate by 0.25% to 1.0%
Employee FD’s Perhaps a higher interest up to 0.5% Perhaps a higher interest up to 0.5% Perhaps a higher interest up to 0.5%
Shareholder FD’s Higher interest rate by 0.25% to 1.0% Higher interest rate by 0.25% to 1.0% Higher interest rate by 0.25% to 1.0%

Frequently Asked Questions about Fixed Deposits

Here are Fixed Deposit Account FAQs:

The following entities can issue a fixed deposit account:

  • Public and private sector banks as well as foreign bank branches in India
  • Private sector companies
  • Small finance banks
  • Cooperative banks
  • Public sector companies and undertakings
  • Housing Finance Companies regulated by the National Housing Bank
  • RBI approved NBFCs allowed to take deposits

As a depositor, you get to shield your savings from market risks by investing in a fixed deposit scheme. You earn a safe return as the interest rate is fixed over a fixed tenure. So, you are sure about the amount you will get in return after a specific tenure. If you have accumulated a certain amount, you can simply opt for an FD scheme and build your funds as per convenience. The tenure for the scheme is up to 10 years.

The FD tenure in a bank is at least 7 days, and 1 year for an NBFC. The maximum tenure in a bank is 10 years and for NBFC it is 5 years to 7 years.

In an RD (recurring deposit), you can deposit a certain sum every month and earn interest on this invested amount over a specified tenure at a fixed rate of interest. In an FD, you have to invest a lump-sum amount for a specified tenure at a fixed rate of interest.

Under the DICGC guarantee by government, bank FDs are safe just like retail deposits of up to Rs. 5 lakhs. This protection is available for deposits in small finance banks and regular banks. But the same is not applicable to HFCs and NBFCs. In these cases, it is advisable that you invest only in highly rated or AAA rated institutions to reduce the investment risk.

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